Data center IPO hopefuls brave tougher market as investor scrutiny grows

• DayOne targets a $5 billion IPO at approximately $20 billion valuation, supported by 2.1 gigawatts of capacity bookings across Asia-Pacific and Europe with diversified customers
• SB Energy postponed its IPO plans due to SEC questions, investor concerns over its $60 billion valuation target, and heavy reliance on OpenAI as a major customer
• Higher interest rates and increased scrutiny are forcing data center companies to demonstrate contracted revenue from creditworthy customers to justify billions in upfront investment for AI-ready facilities

Market Summary: Data Center IPO Pipeline Faces Heightened Investor Scrutiny

Key Developments

Singapore-based data center operator DayOne is proceeding with IPO plans targeting a mid-October roadshow and November debut, potentially raising up to $5 billion at a $20 billion valuation. The company previously secured $4.5 billion in Series C funding in June from investors including Coatue and Hillhouse.

Meanwhile, SoftBank-backed SB Energy has delayed its IPO amid SEC questions and investor concerns over its $60 billion valuation target and heavy reliance on OpenAI as a major customer.

Market Dynamics

The data center sector is experiencing a bifurcation as investor scrutiny intensifies:

Favored characteristics:

• Diversified customer bases with contracted, operational demand
• Secured power supply (now the key constraint)
• Geographic diversification and existing operational facilities
• Clear revenue visibility from creditworthy customers

Red flags:

• Heavy dependence on single AI customers
• Projects requiring massive upfront capital with delayed returns
• Planned rather than energized capacity

Financial Context

Higher interest rates are pressuring financing costs for AI infrastructure requiring years to generate returns. Investors increasingly demand transparency on customers and cash flows supporting billion-dollar investments in AI-ready facilities, including high-density racks and liquid-cooling systems.

Pipeline

Multiple data center operators including Switch, Vantage Data Centers, and CyrusOne are exploring or preparing IPOs. Switch has filed confidentially and is expected to launch after DayOne.

DayOne's competitive advantages include 2.1 gigawatts of secured capacity bookings and operations across Asia-Pacific and Europe (Malaysia, Hong Kong, Japan, Finland, Spain), distinguishing it from development-stage competitors in current market conditions.